Founding family ownership and cash holdings

Founding family ownership and cash holdings

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Article ID: iaor201112336
Volume: 34
Issue: 2
Start Page Number: 279
End Page Number: 294
Publication Date: Jun 2011
Journal: Journal of Financial Research
Authors:
Keywords: management
Abstract:

I investigate the relation between founding family ownership and firm cash holdings. I find that cash holdings are significantly lower at family firms than nonfamily firms. I also examine the marginal value of cash and report a smaller value of cash for family firms. Combined, the findings are consistent with the spending hypothesis that family firms tend to deploy cash quickly and the market discounts the quality of their spending.

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